Improving fiscal resilience to underpin Sultanate of Oman’s sustainable economic development
In recent years, Oman has been making significant strides towards economic stability and diversification, as highlighted in a detailed presentation by Hamid Hamirani, Co-founder - EHA Advisory and former advisor at Oman’s Ministry of Finance during last week’s event of The British Omani Society titles ‘Navigating Oman’s Fiscal and Diversification Reforms.
Hamirami’s presentation outlines various key aspects of Oman’s economic landscape, shedding light on its fiscal reforms, infrastructure quality, debt resilience, social protection measures, tax revenue challenges, and labour market reforms.
One of the standout achievements for Oman is its positive fiscal balance, shifting to a surplus of 10.1% of GDP in 2022.
This transformation was fuelled by favourable oil prices, increased tax revenues and prudent expenditure management, leading to a substantial improvement in the country’s fiscal position.
Additionally, efforts to reduce fuel subsidies and enhance nonhydrocarbon revenue streams have played a significant role in strengthening Oman’s fiscal resilience, he said.
Oman has seen a remarkable decline in its government debt, from 67.9% of GDP in 2020 to 36.7% in 2023, with projections indicating a further decrease to less than 30% by 2031.
This reduction in debt levels, coupled with the presence of sizable financial buffers, has helped mitigate sovereign debt stress risks.
However, the trajectory of government debt remains subject to external factors such as oil market developments, highlighting the importance of continued vigilance and prudent financial management, Hamirami noted.
Oman’s infrastructure quality stands out compared to other emerging markets and even surpasses the averages of Gulf Cooperation Council (GCC) and advanced economies. With a public capital stock-to
GDP ratio of 150%, Oman has made significant investments in infrastructure development, driving economic growth and attracting domestic and foreign investments.
OMAN’S INFRASTRUCTURE QUALITY STANDS OUT COMPARED TO OTHER EMERGING MARKETS AND EVEN SURPASSES THE AVERAGES OF GCC AND ADVANCED ECONOMIES. WITH A PUBLIC CAPITAL STOCK-TO-GDP RATIO OF 150%, OMAN HAS MADE SIGNIFICANT INVESTMENTS IN INFRASTRUCTURE DEVELOPMENT, DRIVING ECONOMIC GROWTH AND ATTRACTING DOMESTIC AND FOREIGN INVESTMENTS.